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Avoidable borrowing costs

Avoidable borrowing costs

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Skysong Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1.2 million on March 1, $0.9 million on June 1, and $4 million on December 31. Skysong Company borrowed $1.0 million on March 1 on a five-year, 12% note to help finance the building construction. In addition, the company had outstanding all year a $3- million, five-year, 13% note payable and a $3.4-million, four-year, 16% note payable. (a1) Calculate the company's avoidable borrowing costs assuming Skysong follows IFRS. (Do not round intermediate calculations. Round capitalization rate to 2 decimal places, e.g. 52.75% and final answer to 0 decimal places, e.g. 5,275.) Avoidable borrowing costs
Transcribed Image Text:Skysong Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1.2 million on March 1, $0.9 million on June 1, and $4 million on December 31. Skysong Company borrowed $1.0 million on March 1 on a five-year, 12% note to help finance the building construction. In addition, the company had outstanding all year a $3- million, five-year, 13% note payable and a $3.4-million, four-year, 16% note payable. (a1) Calculate the company's avoidable borrowing costs assuming Skysong follows IFRS. (Do not round intermediate calculations. Round capitalization rate to 2 decimal places, e.g. 52.75% and final answer to 0 decimal places, e.g. 5,275.) Avoidable borrowing costs
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